In many industries, original equipment manufacturers (“OEM's”) do not themselves manufacture some (or even any) of the parts of which their products are made. In some such cases, the OEM's rely on various suppliers to supply them with the parts, etc. that they need to complete the final assembly of the product. In other such cases, even the final assembly of the product is completed by a supplier (who may provide the OEM with the final product for distribution or may even directly distribute the final product through distribution networks or to final consumers).
The suppliers themselves will likely rely on sub-suppliers to provide them with certain parts, such that the entire supply chain can be quite complex and can include many different suppliers at many different levels (the term “suppliers” being used hereinafter to refer to both ultimate supplier(s) and any sub-supplier at any level in the supply chain). The OEM which is selling the final product may not know (unless it specifically enquires thereinto) the intricacies of their own supply chain, which may include hundreds or thousands of suppliers and sub-suppliers.
The relationship between an OEM and its suppliers (or between a supplier and its sub-suppliers) is rarely a one part relationship. Typically, a supplier will supply an OEM with many parts (be they related or unrelated) for more than one (and, in some cases, many) products. Furthermore, the supplier may also be supplying some (or all) of the same parts to other entities (including competitors of the OEM), for a variety of reasons.
Globalization adds another layer of complexity to supply chains, since the OEM's and their suppliers supplying parts, etc. for a final product, are rarely both in the same geographic region of the world (or even in the same country or continent). In many instances an OEM cannot simply drop in on one of its suppliers (let alone its sub-suppliers) whenever it decides that it needs to do so. A similar observation can be made with respect to the relationship between the suppliers and the sub-suppliers.
Finally, the increasing technological complexity of products only adds to this problem as it increases the number of suppliers and the depth of the supply chain.
Nonetheless, despite all of this, OEM's ideally need to try to ensure, at a minimum, adequate timely supply of required parts. This can be quite a challenge in the manufacturing context previously described.
Presently, perhaps somewhat surprisingly to those unfamiliar with the situation, there is simply no effective system to do this. What typically occurs is that an OEM will examine and approve a supplier (in terms of quality and quantity of production) at the start of their relationship with the supplier, and will periodically (for example every few years or so) audit and re-approve the supplier. In the interim, the OEM will place orders with the supplier and trust that the supplier can timely fulfill them, notwithstanding the changing needs of the OEM (and the other persons that the supplier supplies). Assuming the supplier does timely fill the OEM's orders, there is generally likely nothing to suggest to the OEM that the supplier will not be able to do so in the future. In some cases, however, notwithstanding the goodwill of the supplier and its past history with an OEM, the supplier will be unable to meet the changing future needs of the OEM. This obviously will create a problem for the OEM, yet conventionally the OEM has no vision into this problem and when and where it will occur.
To illustrate this point, a concrete example may be taken from the aircraft manufacturing industry. The assignee of the present application manufactures and sells various aircraft in association with the trademark AIRBUS (the present assignee hereinafter referred to as “OEM A”). For the purposes of the present patent application, some of these aircraft may be grouped into different programs of related aircraft, such as the “single aisle” (SA) aircraft program (those aircraft sold in association with the trademarks A318, A319, A320, and A321), the “long range” (LR) aircraft program (those aircraft sold in association with the trademarks A330 and A340), the “double deck” (DD) aircraft program (that aircraft sold in association with the trademark A380), the A400M aircraft program (that aircraft sold in association with the trademark A400M), the A350 aircraft program (that aircraft sold in association with the trademark A350) and the ATR aircraft program (those aircraft sold in association with the trademarks ATR42 and ATR72).
It will be appreciated that for any one individual part, there are several possibilities with respect to that part's use. A first possibility is that a part is used in the manufacture of every aircraft series in each of the aforementioned aircraft programs of OEM A (i.e. the A318, A319, A320, A321, A330, A340, A350, A380, A400M, ATR42 and ATR72). A second possibility is that a part is used only in the manufacture of some, but not all, aircraft series (be they all part of the same program or otherwise) by OEM A. A third possibility is that a part is used only in the manufacture of a single aircraft series by OEM A. The part may also be used by other aircraft OEM's (either with or without the knowledge of OEM A).
An aircraft is composed of thousands of parts. OEM A does not manufacture itself each and every one of these parts. It relies on a complex supply chain, the precise details of which are not relevant to the present application. However, solely for the purpose of illustrating some of the problems with conventional supply chains, it will be assumed (although it is clearly not the case) that each of those parts is supplied by a supplier which itself manufactures the part in question and does not rely on any sub-supplier.
Assuming that a part in question used by OEM A is an aircraft fuselage window, called Window Type A. Window Type A is used both for the single aisle program and for the double deck program. Window Type A is supplied to OEM A primarily by Supplier #1, but also to a limited extent by Supplier #2. Supplier number #1 also supplies OEM A with Window Type B, which OEM A uses for the long range program. Supplier #1 also supplies other OEM's, as well as individual airlines (for use as replacement parts for example), with both Window Type A and Window Type B. Supplier #1 was approved as a supplier to OEM A and in the past has been able to supply OEM A with the windows that it required.
However, in the current year, based on OEM A's current order book, it is forecast that the number of aircraft of each of the aircraft programs will increase on a yearly basis, although not by the same amount per program, nor the same amount year over year. Nor are these increases continuous or constant. Therefore, the number of windows of each type that the supplier will need to supply to OEM A will increase over the next few years, but not at a constant rate and not at the same rate for each type of window supplied. The other OEM's that Supplier #1 supplies may also increase their purchase of windows as well, although OEM A is unaware of the timing and quantity of such increases. OEM A obviously wants to ensure that its supply of windows can keep up with its production rates. While this may appear complex although reasonably achievable, this is but one product in an oversimplified example. The true issue is much greater than this, as OEM A wants to simultaneously ensure that its supply of all of the parts of which all of its products are made can keep up as well.
Conventionally, there is no effective way for OEM A to do this, i.e. to determine where and when (if any) there will be bottlenecks in its supply chain given its current forecast for its increased future needs. Presently, OEM A can simply alert all its suppliers of its forecast increased needs (both in quantity and timing) and trust that the suppliers will be able to comply. This, obviously, may have mixed results. In some cases the suppliers themselves do not understand the effect of OEM A's and others' increased needs on their own business and they will not make adequate preparations to meet the increased demand. Or, they may fail to meet increased demand for a variety of other reasons. In any event, OEM A has no vision in which suppliers will have a problem in advance of the problem itself, so it cannot take steps in advance to avoid the problem from occurring or to mitigate the effects of any problems that will occur. This is an undesirable situation.
Therefore, there is a need in the art for an improved method to assist in managing supplier capacity to meet changing (and particularly increasing and discontinuously variably increasing) demand in a supply chain.